SAN FRANCISCO - Ride-hailing company Lyft , Inc. (NASDAQ: NASDAQ:LYFT) announced its plan to issue $400 million in Convertible Senior Notes due in 2029, targeting qualified institutional buyers. The private offering is contingent on market conditions among other factors. Additionally, Lyft may offer an extra $60 million in notes to cover over-allotments.
The notes, unsecured senior obligations of Lyft, will pay interest semi-annually. Upon conversion, Lyft will settle in cash up to the principal amount, with any excess being paid in cash, Lyft's Class A common stock, or a combination of both at Lyft's discretion.
Lyft's intended use for the net proceeds includes repurchasing part of its 1.50% Convertible Senior Notes due in 2025, funding capped call transactions, and buying up to $50 million of its Class A common stock from institutional investors at the last reported sale price on the date of the note pricing. Should the additional notes option be exercised, Lyft plans to use the proceeds for further capped call transactions and general corporate purposes, which may include working capital, capital expenditures, and potential acquisitions.
The terms for repurchasing the 2025 notes will be negotiated individually and are subject to market conditions. Lyft has not guaranteed the repurchase amount or terms. Market activities by note holders, including unwinding hedge positions, could influence the market price of Lyft's Class A common stock and the notes.
In line with the note pricing, Lyft anticipates entering capped call transactions to reduce potential dilution upon note conversion and to offset cash payments above the principal amount, with a cap in place. The option counterparties or affiliates are expected to purchase Lyft's Class A common stock and engage in derivative transactions which may affect the stock and note prices.
The notes are being offered exclusively to qualified institutional buyers according to Rule 144A under the Securities Act. These securities, including any Class A common stock issuable upon note conversion, have not been registered under the Securities Act and will not be offered or sold in the U.S. without registration or an applicable exemption.
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